How billions in unclaimed money goes unchecked

Sunday April 18 2021
By Alawi Masare

Dar es Salaam. The Controller and Auditor General (CAG) has outlined challenges around the management of unclaimed money in both the banks and mobile operators, saying there are potential risks for losses.

 Money in a bank account which remains dormant for 15 years and that of the mobile money wallets which have not been transacted for five consecutive years are considered unclaimed financial assets or abandoned property, according to the central bank laws.

 The commercial banks and the telecoms are required to regularly send the money to the Bank of Tanzania (BoT).

However, the CAG performance audit report on the management of unclaimed assets at the Ministry of Finance and the BoT for 2019/20 indicates that not all banks remit- ted the abandoned money, creating a room for potential losses.

The CAG Mr Charles Kichere said the BoT records indicated that it holds Sh12.5 billion as unclaimed financial assets while he estimated about Sh49 billion which could be invested were lying idle in the banking and financial institutions.

“This discrepancy indicates weaknesses in the overall management of unclaimed financial assets in the entire cycle from identification to disposition,” the report states.


 The report indicates that while Tanzania had 26 commercial banks which have been operating for more than 15 years by last June, hence qualifying to remit the unclaimed money, it’s only three banks which paid the unclaimed money to the central bank.

The three banks paid a total of Sh2.5 billion while the four mobile money operators remitted about Sh10 billion by June last year. The report states that the BoT did not conduct verification of the remitted money from the banks and the mobile network operators.

 “The audit findings indicated that there was a risk of loss of the unclaimed financial assets from commercial banks and mobile net- work operators,” it states.

 The CAG noted that the central bank has not mechanism in place to determine the magnitude of the potential unclaimed money in both banks and mobile money operators, making it uncertain of the actual amount.

 The report quotes the central bank officials who expressed their confidence with both the banks and the mobile firms.

 Idles cash The report indicates that the central bank was holding Sh12.5 billion idle money as the current laws and regulations do not provide clear guidelines on the procedure to dis- pose-off the money.

 The CAG also cited a letter from the BoT advising the ministry of finance that the money was regu- lated by Public Trustees under the Registration Insolvency and Trusteeship Agency (Rita).

While  BoT has no clear procedure for disposing off the abandoned money, the report also indicates that there were no procedures in place for owners to reclaim back their property.

“Fix the gaps”

Economists say the government must fix the legal gaps to allow usage of the money to economic activities. “Idle cash is a loss to the economy,” said Prof Honest Ngowi of Mzumbe University.

 “The legal issues must be sorted out because that money is impor- tant and highly needed in the cir- culation to power the economy,” he said. Dr Abel Kinyondo of the Univer- sity of Dar es Salaam School of Eco- nomics said staying with idle money in the central bank is a room for potential scam.

 “In my opinion, the money could have been taken to the Treasury’s consolidate fund and should be part of the government budget for priority projects,” he said.

Lesson from other countries

 Unclaimed asset has been an area of concern in many countries, which some of them regularly improved their management system.

 For instance, in 2011, Kenya passed a legislation known as the Unclaimed Financial Assets Act, 2011, which among other things, requires holder entities to remit the unclaimed property to a trust fund, operated and managed by the Unclaimed Financial Assets Authority (UFAA).

Under the same law, the individuals have right to reclaim back the unclaimed prop- erty. In 2008, UK also passed Dormant Bank and Building Society Act which authorizes the government to use assets from cash accounts that have been dormant for 15 years to fund charitable and social causes. The law also gives right to the individual to reclaim the previously unclaimed assets.